Some students see red long after their graduation day

Like many of his peers, Yale alumnus Ben Hansen ’00 became involved in his career interests while he was an undergraduate, jumping into politics and interning over the summers to build his resume. But while many of his classmates left Yale to pursue their careers unencumbered by financial burdens, Hansen continues to pay for his Yale education long after he left the ivory tower.

Five years out of Yale, Hansen pays a monthly check toward the student loans he used to fund his Yale education. Currently, 31 percent of Yale students take out student loans during their college careers, said Myra Smith, Yale’s financial aid director. The average debt for a student of the class of 2004 was $14,967, she said.

Yale students with debt are certainly not alone. Half of college students nationwide take out some type of student loan by the time they graduate, according to the National Center for Education Statistics. And on average, Yale students’ average indebtedness is $6,000 less than the average undergraduate debt of $21,200 for private four-year colleges, according to a 2002 national student loan survey by Nellie Mae.

But while Yale students’ indebtedness is less than the national average, Yale has fared worse in comparison with its top rivals, at least before the implementation of recent changes to its financial aid policy. Average debt for Yale students is nearly twice the indebtedness of their Harvard University peers, which is about $8,830, Harvard Director of Financial Aid Sally Donahue said. And at Princeton University, which instituted a “No Loan” plan in 2001, 17 percent of students ended up borrowing loans for an average indebtedness of $4,300, said Don Betterton, Princeton’s director of financial aid.

Yale alumni in the midst of paying loans agreed that indebtedness can affect a student’s college search, educational experience and post- graduate careers. But, they said, they do not regret taking out loans in order to come to Yale.

“I could have gone to a smaller liberal arts college with everything paid for,” Matt Chu ’03 said. “But money is just money. The experience is what counts.”

Kyle Cousin ’04 did not allow himself to worry about loans while in college, he said. He wanted to appreciate the experience. And, ironically, knowing that he would eventually pay for his education helped him appreciate it even more, he said. Like Cousin, 70 percent of indebted students also said taking out loans was worth the personal growth provided by college experience, according to Nellie Mae.

Unlike Chu, Cousin did not receive federal loans. He was not eligible. Instead, he said, his parents paid for the first two years of Yale, while he paid for the second two. To finance his years, he took out a private loan, and his parents agreed to pay the $450-per-month interest only while he attended Yale.

And then Cousin graduated.

“My first reaction was okay, $450 a month, that’s not that bad,” Cousin said. “But that was just the interest. Then, the principal kicked in.”

Now, Cousin said, he’s learning how to budget — to say the least.

Cousin’s job helps him out. As a consultant for IBM, he said he is paid fairly well. But if it were not for his debt burden and other financial obligations, he said, he is not sure he would be in the same career. By the end of his first summer after graduation, he was becoming anxious, he said. He had to find a way to pay for his student loans, mortgage and other bills. So he wasn’t picky. When the IBM job appeared, he took it.

Cousin was also helped by current loan rates, which are currently at historic lows. While rates vary from situation to situation, the rate on a Stafford loan, which is the largest source of student loan funds in the nation, dropped to a record low of 3.37 percent for 2004-05. In 2000-01, student borrowers paid 8.19 percent interest.

Rebecca Livengood ’07, a member of the Undergraduate Organizing Committee, said she worries that having debt forces graduates, like Cousin, into jobs they would not otherwise choose. She has a number of friends who have taken out loans, but are currently involved in interesting, creative activities at Yale, she said. And those activities, such as political activism, might not be very conducive to making money after graduation.

“It’s troublesome that maybe that work will have to end when they graduate,” she said.

According to the Nellie Mae survey, however, only 17 percent of borrowers said student loans significantly influenced their career plans. Fifty-nine percent said student loans were worth taking out because of the career opportunities provided by a college degree.

For Hansen, loans have made it more difficult — but not impossible — to pursue his career goals. While he was at Yale, Hansen said, he worried that he would not have the financial means to pursue a political career upon graduation. Hansen took out around $20,000 in loans, he said. After graduation, his interest kicked in at about $116 a month, and he got a job working on Capitol Hill for a $26,000 salary. While the pay is not bad for someone starting out, he said, it still makes it difficult to pay monthly bills.

“I’d rather put that money into a 401k,” he said. “Instead, I put it into Yale.”

Relying on student loans can also impact a student’s experience while they are at Yale. But because few political internships are paid, Hansen’s parents helped him out financially, he said.

But not all students who take out loans have financial help from their parents. Chu used his summers to work, he said. His goal was to earn $5,000 each summer to put toward travel, books and daily expenses.

“My hope was that during the year, I wouldn’t have to ask my parents for any financial help,” he said.

Even so, Chu said, working in the summer was far from a negative experience. He would usually earn money doing academic research, and it taught him responsibility and self-sufficiency, he said.

But while having loans may affect summer and school year jobs and internships, the effect of debt is not usually seen until after graduation.

Although Devin Caughey ’04 did not take out loans to pay for Yale, he said he can see how indebtedness — or the lack thereof — has influenced the career paths of him and his friends.

“When it becomes evident is when people start talking about their options post-college,” he said. “[Having to pay back loans] narrows your choices significantly. It’s not necessarily that you have to take the high-paying job, but you feel pressured to start working immediately, and to really think [carefully] about graduate school.”

Forty-two percent of students who did not go on to graduate school said their loans had a major influence on their decision, the Nellie Mae survey reported. In 1997, however, that number was 69 percent.

Caughey said several of his friends spent a year at Cambridge University after graduating because they did not have to worry about finances and paying back loans. Meanwhile, another friend, who took out a number of loans to pay for her undergraduate education at the University of Virginia, has had to think carefully about post-graduate education, he said. Although though she was just accepted to public health school, at $50,000 a year, she doesn’t know how to begin to pay for it, he said.

With Yale’s revamped financial aid package, some alumni expressed hope that the debt burden for Yale students would go down.

The new package might be able to reduce student debt, particularly the size of the average loan, Smith said. It should reduce borrowing for middle-income students, who are directly affected by the new policy.

But because the student contribution section of the package was not reduced, Livengood said, many students will still be forced to take out loans.

Recent grads like Chu, Cousin and Hansen will not benefit from the changes. But Hansen did say one alteration might make life easier: if Yale alumni clubs would stop calling him to ask for money.